As more college graduates default on their student loans, some schools are taking drastic measures to ensure repayment. According to a Bloomberg report, Yale, the University of Pennsylvania and George Washington University have taken defaulters to court in recent years to try to force them to pay up.

The schools are targeting recipients of Perkins loans, which are subsidized loans usually awarded to lower-income students with exceptional financial need. Unlike the larger federal Stafford-loan program, in which the Department of Education acts as the lender, Perkins loans are administered directly by participating institutions with a mixture of funds from the federal government and the schools themselves. Almost 500,000 of the loan awards are doled out annually.

According to court records analyzed by Bloomberg, the University of Pennsylvania filed at least 12 lawsuits to recoup Perkins-loan money last year. Yale is suing a former student for about $6,500 in outstanding loans, while George Washington University is suing a student for $7,000 in Perkins loans and $15,000 in unpaid tuition costs. Though there’s no comprehensive data that show how often schools are taking graduates to court, defaults grew by 20% from 2006 to 2011, up to $964 million. Overall, federal-student-loan defaults have also been on the rise for several years.

Such amounts might seem like small potatoes in the grand scheme, hardly worthy of litigation. However, Mark Kantrowitz, publisher of FinAid.org, says recent stresses put on the Perkins-loan system may be forcing more schools to take legal action. The loan fund is supposed to be self-replenishing, with debtors paying the money they owe back into the pool of loan money. In the past, the federal government offered cash infusions of about $65 million per year to ensure the program’s solvency, but that funding dried up after the 2008 fiscal year. “The colleges are getting a little bit more aggressive in pursuing these loans,” Kantrowitz says.

Typically, an expensive lawsuit is a last resort for schools. Before taking such measures, they’re likely to send letters outlining the amount of the loan and repayment options, report the default to credit agencies, attempt to garnish a debtor’s wages, and enlist the aid of a collection agency. If a graduate is sued, they’ll also owe expensive collection fees, which are higher for Perkins loans than for other types of federal student loans. The federal government has already taken a tough stance on defaulters in recent years, with debt collectors earning $1 billion in commissions for tracking down federal-student-loan defaulters in 2011, according to Bloomberg.

President Obama has proposed expanding the Perkins-loan program from its current $1 billion in funding to $8 billion by getting more schools involved in the program and awarding federal money to schools that are able to stem rapidly rising tuition costs. However, the interest rates on the loans would increase from 5% to 6.8%, and they wouldn’t necessarily be restricted to students with the same financial needs. The new Perkins-loan model would be tailored more to reducing student reliance on private loans than providing a low-interest vehicle for low-income families.

For those in default, experts recommend trying to reach out to the school to work out a repayment plan instead of trying to dodge a debt. Increasingly, neither schools nor the government are willing to look the other way when there’s money owed. “Schools are required to take efforts to collect on these loans,” says Justin Draeger, president of the National Association of Student Financial Aid Administrators. “When you borrow money from taxpayers, you have to pay it back.”

College student debt, and the capacity of students to pay back their loans, is a major national issue. Yale College, however, is at the forefront of schools in its efforts to eliminate students’ need to borrow. Yale College's generous financial aid is structured so that no student needs to take out a loan. Although some students still choose to borrow, that borrowing has decreased dramatically in recent years. Only about one-fifth of Yale undergraduates borrow, and 2012 graduates who borrowed left school with only $12,000 in debt on average, which is much less than the debt accrued by the average student borrower nationwide.

Perkins is a federal student loan program that participating schools administer. Yale, like all other schools participating in the program, has a prescribed responsibility to collect the loan payments. This federally mandated role is important because the money paid back by borrowers funds new loans to the students who come after them. In fulfilling its responsibility to administer the loans, Yale does everything it possibly can to keep Perkins borrowers from defaulting. Borrowers are offered counseling and reminders, and they are given deferments and grace periods to help avoid collection referral and the last resort possibility of a lawsuit. As a result of this diligence and forbearance, only about 1% of Yale students ever default on a loan, and only a small fraction of those ever end up in litigation. Instead, arrangements are reached whereby students resume making loan payments.

Yale College is one of the few schools in the nation that admits all students without regard to their ability to pay, and meets their full demonstrated financial aid need.

There is an informative description of Yale College affordability, including the increase in students receiving aid and the decrease in borrowing, at:

I hate to parrot what I've already commented on in a previous story, but again I am disappointed in a lot of the comments left on this article. People are so quick to forget, once they've 'got theirs', that they owe their accomplishments to society and what it has been able to provide. It is in our best interest to take care of one another in times of need, or when growing, to ensure a solid work force. Why is that concept so difficult to grasp these days? "I got mine, who cares about yours" is the sort of mentality that got us to where we are now and it is not sustainable.

But in regards to the article itself: Yes, people should read their full contracts (even if they're not mature enough to understand the potential life-long contract it is) and yes, people should repay their debt. However, it is simply not that easy. How will a student repay their debt if they cannot find a job---or can only find jobs hardly fit to survive on? What, then, is the solution? Throw them in jail (where it'd cost more to take care of them than simply forgiving a loan)? Garnish wages (so they can't afford basic necessities and end up on food stamps)?

That major colleges are going after low-income loan holders is simply mind-boggling, but not unexpected. Keep the peasants in their place, right? Give the colleges back to the elite, who will be the only ones capable of affording them. Surely these colleges, given their sizes, have bigger fish to fry.

Let's say Yale takes the interest earned on it's roughly $20 Billion endowment, wait not all of it (10 year performance is 9.8% so reinvest 7.3% to keep up with inflation or use it to pay off the board) take 2.5% yearly. With 2.5% of the endowment Yale could offer 8000 students $62,500 in tuition remission ($58,600 is quoted on Yale's page as covering tuition, room/board, and expenses). At under 2,000 new students a year this indicates that Yale could give full rides to all undergrads (for four years) from a quarter of the annual INTEREST ON IT'S ENDOWMENT as reported in 10 year performance. So ... why do we have a college cost problem in this country?

I'm not going to post a comment claiming that it's all societies fault and our loans need to be paid but lets face some facts. The economy isn't what it was 10 years ago (hell, even 5 years ago), their are not enough jobs for the amount of college students this country puts out, and if you paid for something, like college, with the understanding that your money would result in receiving a service or item, a job in this example, and you didn't get it wouldn't you want your money back? I think what is really occurring is an outpouring of frustration and heartbreak from the fairy tale we were all told would come true. I myself have almost $70 grand in loans and my degrees (notice the plural) is in Business Administration and Logistics, yet, alas, I am only a humble EMS dispatcher, making $12 dollars an hour and barely getting by. Yeah, you're right, I must be a loser. I should just suck it up and pay my bills.

Academic institutions are perfectly within their right to sue if students don't pay back their loans. If the students (for whatever reason) cannot hold themselves accountable, than the institutions must step in to protect their original investment (i.e. the loan).

Jesus, stop blaming everyone else and take soma [ccountability... ] That there is the problem right there on the nailhead they're all on some kinda soma best not wake the sleeping giant in Mommy's basement or they might go ahead and shoot the place up. Remember little Adam Lanza -- and his idea of accountability?

You go to a school, you know how much it costs, you know you are obligaed to pay it, but when you graduate you dont pay it?

This country continues to slide in to entitlement and blame. You are obligated to pay your loans. That's no ones fault but yours. If you dont have a job, that sucks, but it doesn't mean you dont continue to have obligations.

Jesus, stop blaming everyone else and take soma ccountability... It's not the credit card's fault you were stupid enough to overspend those either. Losers.

the students should sue the schools for overcharging for what should only cost less than half of what they're getting. Whatever their career choice, cost per term should be one tenth of the average yearly wage for that course of study.

It all depends on why they're not paying. The Millennials have an extraordinary high rate of unemployment. If they have graduated within the past five years they're probably unemployed and can't pay it back yet.

"...The schools are targeting recipients of Perkins loans, which are subsidized loans usually awarded to lower-income students with exceptional financial need..." Do we know the status of these students? Do they have a job? Do they have an ability to repay the loans? If not it's like throwing someone in a Debtor's Prison". They stay in jail until they repay the debt but since they are in jail they cannot work.

@justinhoop I disagree with this. Credit cards pre approve anyone with a beating heart then they charge sky high interest rates. In this economy with the many people who are desperate, unemployed, defaulting on their mortgage such offers to have quick money are more intriguing. No one is stupid just desperate. Then after the interest charges catch up and the loans for the house start to default and the school loans start to default as well well who plans on that? no one is god and no one knows if you will lose that 50k a year job after college due to lay offs. This stupid american mentality of 'no ones fault but your own' is why this country is so stressful and is the way it is now with a flunking economy. Have a little compassion brute people!

They should sue the university if they don't get a job offer upon completion of the degree. Unemployed law school graduates have been doing that recently. Note that even graduates in engineering and science have found employment tight predominantly because large corporations like GE, IBM, Microsoft, Apple, etc continue to export both blue and white collar jobs overseas. And if that isn't bad enough, Washington hands out work visas so that these same corporations can bring them here to take the few remaining jobs in America. I personally know competent engineers who have been displaced in this manner.

That is exactly what's wrong with this country today. If you brought a 1940s civil defense monitor here by time machine, he'd be shocked that you could do what you do and actually get paid. Then again, if he saw who was occupying the whitehouse, he'd completely understand your comment. America has become a nation of the ignoble, wilfully ignorant, and illegally immigrant. Why would we place any value on honorable behavior, it's all a game of musical chairs where the first one to shimmy their big butt onto the folding chair wins. But what did they really win?